We all hear of Government’s interventions to support SMEs and we all wonder, how. If you are like me who is skeptical of this government, you will take everything they say with a pinch of salt.
However, I have been very interested in manufacturing, and I decided to do some research on the Government’s intervention when it comes to the support of SMEs. From incubation, funding, machinery support. Check the article we wrote on various Government funding.
I visited the Export Processing Zones Authority last week, an Authority that provides investment opportunities for export oriented business. One thing that they noted from 1991 is that 98% of the companies that are based at EPZ are all foreign owned. This led them to create a hub for Kenyans who are already manufacturing locally and are ready to go to the next level in terms of export.
Export Business Accelerator (EBA) programme.
This programme was introduced after the Government noted that most SMEs lack a suitable business premises, they lack export market information, credit facilities and basically the lack of export facilitation.
The programme’s objective is to nurture SMEs that have majority local shareholding, to enable them mitigate these challenges. The SMEs should operate in the following sectors:
Textitle and apparels
horticultural/ food processing
textile and apparels
Your business should operate from the sectors we mentioned above
They do not work with start ups, but companies that have been existing
You should plan to graduate from the EBA programme to normal EPZ programme after 5 years
The total investment for your business should be under Ksh 40 M
Have a labour force of not more than 100 workers
Your company should have 75% local Kenyan shareholding
Well, if you are in manufacturing, you will appreciate the goodies that they are throwing your way:
No corporate tax for 10 years and 25% thereafter
10 years withholding tax exemption
100% investment deduction over 20 years
perpetual import and tax exemption on company inputs like raw materials, machinery etc
Business Development Services
This programme brings other stakeholders to support your business with services like:
technology sourcing and application
business planning management
export logistics and customs management
product design and development
For you to get into the programme, you have to write a business plan and present it to the Export Processing Zones Authority for appraisal, with an application fee of Ksh 25,000. (ouch)
If the application is successful, you will be required to pay an annual fee of Ksh 100,000, get a NEMA license and you can start your operations.
I could only get 2013 statistics about this programme, but here goes.
There were 10 SMEs incubated under this programme, and they exported to Europe, USA, regional markets (COMESA, EAC) Their total export volume was Ksh 190M while direct employment was 170 workers. The total investment was Ksh 156M.